SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
CEL-SCI CORPORATION
(Name of Registrant as Specified In Its Charter)
William T. Hart - Attorney for Registrant
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
2628D:1-2
CEL-SCI CORPORATIONCanal Center Plaza Suite 510
Alexandria, Virginia 223l4 (703) 549-5293
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
To the Shareholders:
Notice is hereby given that the annual meeting of the
shareholders of CEL-SCI Corporation (the "Company") will be at
the Holiday Inn Hotel & Suites, 625 First Street, Alexandria,
Virginia, 22314 on , at 10:00 A.M., for the
following purposes:
(1) to elect the directors who shall constitute the Company's
Board of Directors for the ensuing year;
(2) to ratify the 1995 sale of 1,150,000 shares of common stock
and 1,150,000 common stock purchase warrants, as set forth in the
accompanying Proxy Statement.
(3) to ratify the appointment of Deloitte & Touche as the
Company's independent accountants for the fiscal year ending
September 30, 1997;
(4) to transact such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on ,
1997 as the record date for the determination of shareholders
entitled to notice of and to vote at such meeting. Shareholders
are entitled to one vote for each share held. As of , 1997,
there were shares of the Company's Common Stock
issued and outstanding.
CEL-SCI CORPORATION
April , 1997 By Geert R. Kersten
Chief Executive Officer
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY
CARD, AND SIGN, DATE AND RETURN THE PROXY CARD.
TO SAVE THE COST OF FURTHER SOLICITATION PLEASE MAIL YOUR PROXY
CARD PROMPTLY.
CEL-SCI CORPORATION
66 Canal Center Plaza Suite 510
Alexandria, Virginia 223l4 (703) 549-5293
PROXY STATEMENT
The accompanying proxy is solicited by the Board of
Directors of the Company for voting at the annual meeting of
shareholders to be held on , l997, and at any and all
adjournments of such meeting. If the proxy is executed and
returned, it will be voted at the meeting in accordance with any
instructions, and if no specification is made the proxy will be
voted for the proposals set forth in the accompanying notice of
the annual meeting of shareholders. Shareholders who execute
proxies may revoke them at any time before they are voted, either
by writing to the Company at the address set forth on page one or
in person at the time of the meeting. Additionally, any later
dated proxy will revoke a previous proxy from the same
shareholder. This proxy statement was mailed to shareholders of
record on or about , 1997.
There is one class of capital stock outstanding.
Provided a quorum consisting of one-third of the shares entitled
to vote is present at the meet- ing, the affirmative vote of a
majority of the shares of Common Stock voting in person or
represented by proxy is required to elect directors, to ratify
the 1995 sale of common stock and warrants, and to ratify the
appointment of Deloitte & Touche as the Company independent
accountants for the fiscal year ending September 30, 1997.
Cumulative voting in the election of directors is not permitted.
The adoption of any other proposals to come before the meeting
will require the approval of a majority of votes cast at the
meeting.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of ,
1997, information with respect to the only persons owning
beneficially 5% or more of the out- standing Common Stock and the
number and percentage of outstanding shares owned by each
director and officer and by the officers and directors as a
group. Unless otherwise indicated, each owner has sole voting
and investment powers over his shares of Common Stock.
Number of Percent of
Name and Address Shares (1) Class (3)
Maximilian de Clara 44,667 *
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland
Geert R. Kersten 540,024 (2) 5.6%
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
Number of Percent of
Name and Address Shares (1) Class (3)
Patricia B. Prichep 51,197 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
M. Douglas Winship 20,334 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
Eyal Talor, Ph.D. 23,000 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
Prem Sarin, Ph.D. 21,667 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 22314
Daniel Zimmerman, Ph.D. 4,000 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 22314
Mark Soresi 93,375 *
l0l0 Wayne Ave., 8th Floor
Silver Spring, MD 209l0
F. Donald Hudson 29,000 *
53 Mt. Vernon Street
Boston, MA 02108
All Officers and Directors
as a Group (9 persons) 242,573 %
*Less than 1%
(1) Includes shares issuable prior to August 31, 1997 upon the
exercise of options or warrants granted to the following persons:
Options or Warrants Exercisable
Name Prior to August 31,l997
Maximilian de Clara 44,667
Geert R. Kersten 435,084
Patricia B. Prichep 48,167
M. Douglas Winship 20,334
Dr. Eyal Talor 21,500
Options or Warrants Exercisable
Name Prior to August 31, l997
Prem Sarin, Ph.D. 21,667
Daniel Zimmerman, Ph.D. 4,000
Mark Soresi 91,500
F. Donald Hudson 29,000
(2) Amount includes shares held in trust for the benefit of Mr.
Kersten's minor children. Geert R. Kersten is the stepson of
Maximilian de Clara.
(3) Amount excludes shares which may be issued upon the exercise
of other op- tions, warrants and convertible securities
previously issued by the Company.
ELECTION OF DIRECTORS
Unless the proxy contains contrary instructions, it is
intended that the proxies will be voted for the election of the
nominees listed below to serve until the next annual meeting of
shareholders and until their successors shall be elected and
shall qualify.
All nominees have consented to serve if elected. In
case any nominee shall be unable or shall fail to act as a
director by virtue of an unexpected occurrence, the proxies may
be voted for such other person or persons as shall be determined
by the persons acting under the proxies in their discretion.
Officers and Directors
Name Age Position
Maximilian de Clara 68 Director and President
Geert R. Kersten, Esq. 38 Director, Chief Executive
Officer, Secretary and
Treasurer
Patricia B. Prichep 45 Vice President of
Operations
M. Douglas Winship 48 Vice President of
Regulatory Affairs and
Quality Assurance
Eyal Talor, Ph.D. 41 Vice President of
Research and
Manufacturing
Prem S. Sarin, Ph.D. 62 Vice President of
Research for Infectious
Diseases
Daniel H. Zimmerman, Ph.D. 55 Vice President of
Research, Cellular
Immunology
Mark V. Soresi 44 Director
F. Donald Hudson 63 Director
Mr. Maximilian de Clara, by virtue of his position as an officer
and director of the Company, may be deemed to be the "parent" and
"founder" of the Company as those terms are defined under
applicable rules and regulations of the Securities and Exchange
Commission.
The principal occupations of the Company's officers and
directors, during the past several years, are as follows:
Maximilian de Clara. Mr. de Clara has been a director of
the Company since its inception in March, l983, and has been
president of the Company since July, l983. Prior to his
affiliation with the Company, and since at least l978, Mr. de
Clara was involved in the management of his personal investments
and personally funding research in the fields of biotechnology
and bio- medicine. Mr. de Clara attended the medical school of
the University of Munich from l949 to l955, but left before he
received a medical degree. During the summers of l954 and l955,
he worked as a research assistant at the University of Istanbul
in the field of cancer research. For his efforts and dedication
to research and development in the fight against cancer and AIDS,
Mr. de Clara was awarded the "Pour le Merit" honorary medal of
the Austrian Military Order "Merito Navale" as well as the honor
cross of the Austrian Albert Schweitzer Society.
Geert R. Kersten, Esq. Mr. Kersten was Director of
Corporate and Investment Relations for the Company between
February, 1987 and October, 1987. In October of 1987, he was
appointed Vice President of Operations. In Decem- ber, 1988, Mr.
Kersten was appointed director of the Company. Mr. Kersten also
became the Company's secretary and treasurer in 1989. In May,
1992, Mr. Ker- sten was appointed Chief Operating Officer and in
February, 1995, Mr. Kersten became the Company's Chief Executive
Officer. In previous years, Mr. Kersten worked as a financial
analyst with Source Capital, Ltd., an investment advising firm in
McLean, Virginia. Mr. Kersten is a stepson of Maximilian de
Clara, who is the President and a Director of the Company. Mr.
Kersten attended George Washington University in Washington, D.C.
where he earned a B.A. in Accounting and an M.B.A. with emphasis
on International Finance. He also attended law school at
American University in Washington, D.C. where he re- ceived a
Juris Doctor degree.
Patricia B. Prichep has been the Company's Vice President of
Opera- tions since March, 1994. Between December, 1992 and
March, 1994, Ms. Prichep was the Company's Director of
Operations. From June, 1990 to December, 1992, Ms. Prichep was
the Manager of Quality and Productivity for the NASD's Manage-
ment, Systems and Support Department. Between 1982 and 1990, Ms.
Prichep was Vice President and Operations Manager for Source
Capital, Ltd.
M. Douglas Winship has been the Company's Vice President of
Regula- tory Affairs and Quality Assurance since April, 1994.
Between 1988 and April, 1994, Mr. Winship held various positions
with Curative Technologies, Inc., in- cluding Vice President of
Regulatory Affairs and Quality Assurance (1991-1994).
Eyal Talor, Ph.D. has been the Company's Vice President of
Research and Manufacturing since March, 1994. From October, 1993
until March, 1994, Dr. Talor was Director of Research,
Manufacturing and Quality Control, as well as the Director of the
Clinical Laboratory, for Chesapeake Biological Labora- tories,
Inc. From 1991 to 1993, Dr. Talor was a scientist with SRA
Technolo- gies, Inc., as well as the director of SRA's Flow
Cytometry Laboratory (1991- 1993) and Clinical Laboratory (1992-
1993). During 1992 and 1993, Dr. Talor was also the Regulatory
Affairs and Safety Officer For SRA. Since 1987, Dr. Talor has
held various positions with the John Hopkins University,
including course coordinator for the School of Continuing Studies
(1989-Present), re- search associate and lecturer in the
Department of Immunology and Infectious Diseases (1987-1991), and
associate professor (1991-Present).
Prem S. Sarin, Ph.D. has been the Vice President of Research
for Viral Technologies, Inc. (the Company's wholly-owned
subsidiary) since May 1, 1993. Dr. Sarin was an Adjunct
Professor of Biochemistry at the George Washington University
School of Medicine, Washington, D.C., from 1986-1992. From 1975-
1991 Dr. Sarin held the position of Deputy Chief, Laboratory of
Tumor Cell Biology at the National Cancer Institute (NCI), NIH,
Bethesda, Maryland. Dr. Sarin was a Senior Investigator (1974-
1975) and a Visiting Scientist (19721974) at the Laboratory of
Tumor Cell Biology at NCI, NIH. From 1971-1972 Dr. Sarin held
the position of Director, Department of Molecular Biology,
Bionetics Research Laboratory, Bethesda, Maryland.
Daniel H. Zimmerman, Ph.D. has been the Company's Vice
President of Cellular Immunology since January 1996. Dr.
Zimmerman founded CELL MED, Inc. and was its president from 1987-
1995. From 1973 to 1987 Dr. Zimmerman served in various
positions at Electronucleonics, Inc. including Scientist, Senior
Scientist, Technical Director and Program Manager. From 1969-
1973 Dr. Zimmer- man was a Senior Staff Fellow at NIH.
Mark V. Soresi. Mr. Soresi became a director of the Company
in July, 1989. In 1982, Mr. Soresi founded, and since that date
has been the president and Chief Executive Officer of REMAC(R),
Inc. REMAC(R) is in- volved in the clean-up of hazardous and
toxic waste dump sites. Mr. Soresi attended George Washington
University in Washington, D.C. where he earned a Bachelor of
Science in Chemistry.
F. Donald Hudson. F. Donald Hudson has been a director of
the Com- pany since May, 1992. From December 1994 to October
1995 Mr. Hudson was President and Chief Executive Officer of
VIMRx Pharmaceuticals, Inc. Between 1990 and 1993, Mr. Hudson
was President and Chief Executive Officer of Neuromedica, Inc., a
development stage company engaged in neurological research.
Until January, 1989, Mr. Hudson served as Chairman and Chief
Executive Officer of Transgenic Sciences, Inc. (now TSI
Corporation), a publicly held biotechnology corporation which he
founded in January, 1987. From October, 1985 until Janu- ary,
1987, Mr. Hudson was a director of Organogenesis, Inc., a
publicly held biotechnology corporation of which he was a
founder, and for five years prior thereto was Executive Vice
President and a director of Integrated Genetics, Inc., a
corporation also engaged in biotechnology which he co-founded and
which was publicly traded until its acquisition in 1989 by
Genzyme, Inc.
All of the Company's officers devote substantially all of
their time on the Company's business. Messrs. Soresi and Hudson,
as directors, devote only a minimal amount of time to the
Company.
The Company's Board of Directors met six times during the
year ending September 30, 1996. All of the Directors attended
each of these meetings. The Company has an Audit Committee
comprised of Mr. Kersten and Mr. Hud-
son. The purpose of the Audit Committee is to review and approve
the selection of the Company's auditors, review the Company's
financial statements with the Company's independent auditors, and
review and discuss the independent auditor's management letter
relating to the Company's internal accounting con- trols. During
the fiscal year ending September 30, 1996, the Audit Committee
met once. All members of the Audit Committee attended this
meeting. The Company has a Compensation Committee comprised of
all members of the Board of
Directors except Mr. Kersten. The Compensation Committee met on
three occa- sions during the fiscal year ending September 30,
1996. All members of the Compensation Committee attended this
meeting.
Executive Compensation
The following table sets forth in summary form the compensation
received by (i) the Chief Executive Officer of the Company and
(ii) by each other executive officer of the Company who received
in excess of $100,000 during the fiscal year ended September 30,
1996.
Annual Compensation Long Term Compensation
Re- All
Other stric- Other
Annual ted LTIP Com-
Compen- Stock Options Pay- pensa-
Name and Princi- Fiscal Salary Bonus sation Awards Granted outs tion
pal Position Year (1) (2) (3) (4) (5) (6) (7)
Maximilian 1996 $225,000 $75,000 $85,016 - 70,000 - $88
de Clara, 1995 - - - $95,181 - 225,000 - -
President 1994 - - - $93,752 - 70,000 - -
Geert R.
Kersten, 1996 $172,531 $75,000 $9,420 - 294,000 - $8,869
Chief Execu-
tive 1995 $164,801 - $ 9,426 - 224,750 - $3,911
Officer,
Secretary 1994 $182,539 - $ 8,183 - 50,000 - $4,497
and Treasurer
M. Douglas
Winship, 1996 $119,100 - $2,400 - - - $2,488
Vice President
of 1995 $113,500 - $ 1,200 - 22,000 - $2,100
Regulatory
Affairs
Prem S. Sarin,1996 $102,379 - - - 32,000 - $3,160
Vice President of
Research, Infectious
Diseases
Eyal Talor, 1996 $107,458 - $3,000 - 8,000 - $3,312
Vice President of
Research and
Manufacturing
(1) The dollar value of base salary (cash and non-cash) received.
(2) The dollar value of bonus (cash and non-cash) received.
(3) Any other annual compensation not properly categorized as salary
or bonus, including perquisites and other personal benefits,
securities or property. Amounts in the table represent
automobile, parking and other transportation expenses.
(4) During the period covered by the Table, no shares of restricted
stock were issued as compensation for services to the persons
listed in the table. As
of September 30, 1996, the number of shares of the Company's
common stock, owned by the officers included in the table above,
and the value of such shares at such date, based upon the market
price of the Company's common stock were:
Name Shares Value
Maximilian de Clara - --
Geert R. Kersten 95,940 $551,655
M. Douglas Winship - --
Prem S. Sarin - --
Eyal Talor 1,500 $8,625
Dividends may be paid on shares of restricted stock owned by the
Company's officers and directors, although the Company has no
plans to pay dividends.
(5) The shares of Common Stock to be received upon the exercise of
all stock options granted during the period covered by the Table.
Includes certain options issued in connection with the Company's
l996 Salary Reduction Plan as well as certain options purchased
from the Company. See "Options Granted During Fiscal Year Ending
September 30, l996" below.
(6) "LTIP" is an abbreviation for "Long-Term Incentive Plan". An
LTIP is any plan that is intended to serve as an incentive for
performance to occur over a period longer than one fiscal year.
Amounts reported in this col- umn represent payments received
during the applicable fiscal year by the named officer pursuant
to an LTIP.
(7) All other compensation received that the Company could not
properly report in any other column of the Table including annual
Company contributions or other allocations to vested and unvested
defined contribution plans, and the dollar value of any insurance
premiums paid by, or on behalf of, the Company with respect to
term life insurance for the benefit of the named executive
officer, and the full dollar value of the remainder of the pre-
miums paid by, or on behalf of, the Company. Amounts in the
table repre- sent life insurance permiums and/or contributions
made by the Company to a 401(k) pension plan on behalf of persons
named in the table.
Long Term Incentive Plans - Awards in Last Fiscal Year
None.
Employee Pension, Profit Sharing or Other Retirement Plans
During 1993 the Company implemented a defined
contribution retire- ment plan, qualifying under Section 401(k)
of the Internal Revenue Code and covering substantially all the
Company's employees. The Company's contribution is equal to the
lesser of 3% of each employee's salary, or 50% of the em-
ployee's contribution. The 1996 expenses for this plan were
$29,779. Other than the 401(k) Plan, the Company does not have a
defined benefit, pension plan, profit sharing or other retirement
plan.
Compensation of Directors
Standard Arrangements. The Company currently pays its
directors $1,500 per quarter, plus expenses. The Company has no
standard arrangement pursuant to which directors of the Company
are compensated for any services provided as a director or for
committee participation or special assignments.
Other Arrangements. The Company has from time to time
granted options to its outside directors: Mr. Soresi and Mr.
Hudson. See Stock Options below for additional information
concerning options granted to the Company's directors.
Employment Contracts
Effective January 2, 1996, the Company entered into a three-
year em- ployment agreement with Mr. de Clara. The employment
agreement provides that during the period between January 2, 1996
and January 2, 1997, the Company will pay Mr. de Clara an annual
salary of $300,000. During the years ending January 2, 1998 and
1999, the Company will pay Mr. de Clara a salary of $330,000 and
$363,000 respectively. In the event that there is a material
reduction in Mr. de Clara's authority, duties or activities, or
in the event there is a change in the control of the Company,
then the agreement allows Mr. de Clara to resign from his
position at the Company and receive a lump-sum payment from the
Com- pany equal to 18 months salary. For purposes of the
employment agreement, a change in the control of the Company
means the sale of more than 50% of the outstanding shares of the
Company's Common Stock, or a change in a majority of the
Company's directors.
Effective August 1, 1994, the Company entered into a three-
year em- ployment agreement with Mr. Kersten. The employment
agreement provides that during the period between August 1, 1994
and July 31, 1995, the Company will pay Mr. Kersten an annual
salary of $198,985. During the years ending August 31, 1996 and
1997, the Company will pay Mr. Kersten a salary of $218,883 and
$240,771 respectively. In the event that there is a material
reduction in Mr. Kersten's authority, duties or activities, or in
the event there is a change in the control of the Company, then
the agreement allows Mr. Kersten to resign from his position at
the Company and receive a lump-sum payment from the Com- pany
equal to 18 months salary. For purposes of the employment
agreement, a change in the control of the Company means the sale
of more than 50% of the outstanding shares of the Company's
Common Stock, or a change in a majority of the Company's
directors. Pursuant to the agreement, the Company also agreed to
grant Mr. Kersten, in accordance with the Company's 1994
Incentive Stock Option Plan, options to purchase 50,000 shares of
the Company's Common Stock.
Compensation Committee Interlocks and Insider Participation
The Company has a compensation committee comprised of all of
the Com- pany's directors, with the exception of Mr. Kersten.
During the year ended September 30, 1996, Mr. de Clara was the
only officer participating in deli- berations of the Company's
compensation committee concerning executive officer compensation.
See Item 13 of this report for information concerning transac-
tions between the Company and Mr. de Clara.
During the year ended September 30, 1996, no director
of the Company was also an executive officer of another entity,
which had an executive officer of the Company serving as a
director of such entity or as a member of the com- pensation
committee of such entity.
Stock Options
The following tables set forth information concerning
the options granted, during the fiscal year ended September 30,
1996, to the persons named below, and the fiscal year-end value
of all unexercised options (regardless of when granted) held by
these persons.
Options Granted During Fiscal Year Ending September 30, l996
Potential Individual Grants
Realizable Value at
% of Total
Assumed Annual Rates
Options of
Stock Price
Granted to Exercise
Appreciation for
Options Employees in Price Per Expiration
Option Term (3)
Name Granted (#) Fiscal Year Share Date 5%
10%
Maximilian
de Clara 70,000 l6.5% $5.62 9/25/06
$247,l00 $626,500
Geert R.
Kersten 224,000 (1) 53% $2.38 1/10/00
$333,760 $848,960
20,000 (2) 4.7% $3.25 2/21/99 $
40,800 $104,800
50,000 4.8% $5.62 9/25/06
$l76,500 $447,500
M. Douglas
Winship -- -- -- --
-- --
Prem S.
Sarin 20,000 (1) 4.7% $2.38 1/10/00 $
29,800 $ 75,000
12,000 2.8% $5.62 9/25/06
$ 42,360 $l07,400
Eyal Talor 8,000 (1) l.9% $2.38 1/10/00 $
11,920 $ 30,320
(1) Options were granted in accordance with the Company's 1996 Salary
Reduction Plan. Pursuant to the Salary Reduction Plan, any
employee of the Company was allowed to receive options in
exchange for a one-time reduction in such employee's salary.
(2) Option was acquired in connection with the purchase of 20,000
shares of the Company's common stock in February l996. In this
transaction, Mr. Kersten paid $2.50 for one share of common stock
and one option. The options are exercisable at $3.25 per share
and expire on February 2l, l999.
(3) The potential realizable value of the options shown in the table
assuming the market price of the Company's Common Stock
appreciates in value from the date of the grant to the end of the
option term at 5% or 10%.
Option Exercises and Year End Option Values
Value of Unexercised In-the-
Number of Money
Options
Unexercised at
Fiscal
Shares Options (3)
Year-End (4)
Acquired On Value Re- Exercisable/
Exercisable/
Name Exercise (1) alized (2) Unexercisable
Unexercisable
Maximilian de Clara 146,667 $574,486 8,334/139,999
$15,668/$164,031
Geert R. Kersten - -
183,417/335,333 $504,974/$904,686
M. Douglas Winship - - 13,667/8,333
$37,694/$20,626
Prem S. Sarin 10,000 $ 71,900 834/33,666
$1,568/$72,092
Eyal Talor 7,834 $ 32,354
5,167/21,500 $9,714/$55,506
(1) The number of shares received upon exercise of options during the
fiscal year ended September 30, 1996.
(2) With respect to options exercised during the Company's fiscal
year ended September 30, 1996, the dollar value of the difference
between the option exercise price and the market value of the
option shares purchased on the date of the exercise of the
options.
(3) The total number of unexercised options held as of September 30,
1996, separated between those options that were exercisable and
those options that were not exercisable.
(4) For all unexercised options held as of September 30, 1996, the
aggregate dollar value of the excess of the market value of the
stock underlying those options (as of September 30, 1996) over
the exercise price of those unexercised options. Values are
shown separately for those options that were exercisable, and
those options that were not yet exercisable, on Sep- tember 30,
1996.
Stock Option and Bonus Plans
The Company has Incentive Stock Option Plans, Non-
Qualified Stock Option Plans and a Stock Bonus Plan. A summary
description of these Plans follows. In some cases these Plans
are collectively referred to as the "Plans".
Incentive Stock Option Plan. The Incentive Stock
Option Plans collectively authorize the issuance of up to 800,000
shares of the Company's Common Stock to persons that exercise
options granted pursuant to the Plan. Only Company employees may
be granted options pursuant to the Incentive Stock Option Plan.
To be classified as incentive stock options under the
Internal Reve- nue Code, options granted pursuant to the Plans
must be exercised prior to the following dates:
(a) The expiration of three months after the date on which an option
holder's employment by the Company is terminated (except if such
termination is due to the death or permanent and total disabili-
ty);
(b) The expiration of 12 months after the date on which an option
holder's employment by the Company is terminated, if such termi-
nation is due to the Employee's permanent and total disability;
(c) In the event of an option holder's death while in the employ of
the Company, his executors or administrators may exercise, with-
in three months following the date of his death, the option as to
any of the shares not previously exercised;
The total fair market value of the shares of Common Stock
(determined at the time of the grant of the option) for which any
employee may be granted options which are first exercisable in
any calendar year may not exceed $100,000.
Options may not be exercised until one year following the
date of grant. Options granted to an employee then owning more
than 10% of the Common Stock of the Company may not be
exercisable by its terms after five years from the date of grant.
Any other option granted pursuant to the Plan may not be
exercisable by its terms after ten years from the date of grant.
The purchase price per share of Common Stock purchasable
under an op- tion is determined by the Committee but cannot be
less than the fair market value of the Common Stock on the date
of the grant of the option (or 110% of the fair market value in
the case of a person owning more than 10% of the Com- pany's
outstanding shares).
Non-Qualified Stock Option Plan. The Non-Qualified Stock
Option Plans collectively authorize the issuance of up to
1,360,000 shares of the Company's Common Stock to persons that
exercise options granted pursuant to the Plans. The Company's
employees, directors, officers, consultants and ad- visors are
eligible to be granted options pursuant to the Plans, provided
how- ever that bona fide services must be rendered by such
consultants or advisors and such services must not be in
connection with the offer or sale of securi- ties in a capital-
raising transaction. The option exercise price is deter- mined
by the Committee but cannot be less than the market price of the
Com- pany's Common Stock on the date the option is granted.
Stock Bonus Plan. Up to 40,000 shares of Common Stock may
be granted under the Stock Bonus Plan. Such shares may consist,
in whole or in part, of authorized but unissued shares, or
treasury shares. Under the Stock Bonus Plan, the Company's
employees, directors, officers, consultants and ad- visors are
eligible to receive a grant of the Company's shares, provided how-
ever that bona fide services must be rendered by consultants or
advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
Other Information Regarding the Plans. The Plans are
administered by the Company's Compensation Committee ("the
Committee"), each member of which is a director of the Company.
The members of the Committee were selec- ted by the Company's
Board of Directors and serve for a one-year tenure and until
their successors are elected. A member of the Committee may be
removed at any time by action of the Board of Directors. Any
vacancies which may oc- cur on the Committee will be filled by
the Board of Directors. The Committee is vested with the
authority to interpret the provisions of the Plans and sup-
ervise the administration of the Plans. In addition, the
Committee is empow- ered to select those persons to whom shares
or options are to be granted, to determine the number of shares
subject to each grant of a stock bonus or an option and to
determine when, and upon what conditions, shares or options
granted under the Plans will vest or otherwise be subject to
forfeiture and cancellation.
In the discretion of the Committee, any option granted
pursuant to the Plans may include installment exercise terms such
that the option becomes fully exercisable in a series of
cumulating portions. The Committee may also accelerate the date
upon which any option (or any part of any options) is first
exercisable. Any shares issued pursuant to the Stock Bonus Plan
and any options granted pursuant to the Incentive Stock Option
Plan or the Non-Quali- fied Stock Option Plan will be forfeited
if the "vesting" schedule established by the Committee
administering the Plan at the time of the grant is not met. For
this purpose, vesting means the period during which the employee
must re- main an employee of the Company or the period of time a
non-employee must pro- vide services to the Company. At the time
an employee ceases working for the Company (or at the time a non-
employee ceases to perform services for the Com- pany), any
shares or options not fully vested will be forfeited and
cancelled. At the discretion of the Committee payment for the
shares of Common Stock un- derlying options may be paid through
the delivery of shares of the Company's Common Stock having an
aggregate fair market value equal to the option price, provided
such shares have been owned by the option holder for at least one
year prior to such exercise. A combination of cash and shares of
Common Stock may also be permitted at the discretion of the
Committee.
Options are generally non-transferable except upon death of
the op- tion holder. Shares issued pursuant to the Stock Bonus
Plan will generally not be transferable until the person
receiving the shares satisfies the vest- ing requirements imposed
by the Committee when the shares were issued.
The Board of Directors of the Company may at any time, and
from time to time, amend, terminate, or suspend one or more of
the Plans in any manner they deem appropriate, provided that such
amendment, termination or suspension will not adversely affect
rights or obligations with respect to shares or op- tions
previously granted. The Board of Directors may not, without
shareholder approval: make any amendment which would materially
modify the eligibility re- quirements for the Plans; increase or
decrease the total number of shares of Common Stock which may be
issued pursuant to the Plans except in the case of a
reclassification of the Company's capital stock or a
consolidation or merger of the Company; reduce the minimum option
price per share; extend the period for granting options; or
materially increase in any other way the benefits ac- cruing to
employees who are eligible to participate in the Plans.
Prior Stock Option and Bonus Plan. The Company previously
had in effect a Stock Option and Bonus Plan ("the 1987 Plan")
which provided for the grant to the Company's officers,
directors, employees and consultants of either (i) shares of the
Company's Common Stock for services rendered or (ii) options to
purchase shares of Common Stock. The 1987 Plan was terminated by
the Company in 1992. Since the 1987 Plan was terminated, no
further options will be granted and no further bonus shares will
be issued pursuant to the 1987 Plan. However, options previously
granted may nevertheless still be exercised according to the
terms of the options. Prior to the termination of
the 1987 Plan, the Company granted options to purchase 189,250
shares of the Company's Common Stock. To date, options to
purchase 6,000 shares have been exercised. In June, 1995 the
Company cancelled options to purchase 176,250 shares that had
previously been granted under this Plan and reissued options for
the same number of shares under the Company's other stock option
plans. See "Option Summary" below.
Option Summary. The following sets forth certain
information, as of March 31, 1997, concerning the stock options
granted by the Company. Each option represents the right to
purchase one share of the Company's Common Stock.
Total Shares
Shares Reserved for Remaining Reserved Outstanding
Options
Name of Plan Under Plan Options
Under Plan
1987 Stock Option and Bonus Plan 200,000 7,000
(1)
1992 Incentive Stock Option Plan 100,000 83,216
2,783
1992 Non-Qualified Stock Option Plan 60,000 34,500
- -
1994 Incentive Stock Option Plan 100,000 100,000
- -
1994 Non-Qualified Stock Option Plan 100,000 50,583
2,750
1995 Non-Qualified Stock Option Plan 800,000 631,751
63,874
1996 Incentive Stock Option Plan 600,000 158,500
441,500
1996 Non-Qualified Stock Option Plan 400,000 170,000
230,000
TOTAL: 1,235,550 740,907
(1) This Plan was terminated in 1992 and as a result, no new options
will be granted pursuant to this Plan.
As of March 31, 1997, 1,500 shares had been issued
pursuant to the Company's 1992 Stock Bonus Plan. All of these
shares were issued during the fiscal year ending September 30,
1994.
Transactions with Related Parties
The MULTIKINE technology being tested by the Company
was developed by a group of researchers and was assigned, during
l980 and l98l, to Hooper Trading Company, N.V., a Netherlands
Antilles' corporation ("Hooper"), and Shanksville Corporation,
also a Netherlands Antilles corporation ("Shanks- ville"). The
MULTIKINE technology assigned to Hooper and Shanksville was
licensed to Sittona Company, B.V., a Netherlands corporation
("Sittona"), effective September, l982 pursuant to a licensing
agreement which required Sittona to pay Hooper and Shanksville
royalties on income received by Sittona with respect to the
MULTIKINE technology. In l983, Sittona licensed the MULTIKINE
Technology to the Company and received from the Company a
$1,400,000 advance royalty payment. At such time as the Company
generated revenues from the sale or sublicense of this
technology, the Company was required to pay royalties to Sittona
equal to l0% of net sales and l5% of the licensing royalties
received from third parties. In that event, Sittona, pursuant to
its licensing agreements with Hooper and Shanksville, was
required to pay to those companies a minimum of l0% of any
royalty payments received from the Company. The license
agreement with Sittona also required the Company to bear
the expense of preparing, filing and processing patent
applications and to obtain and maintain patents in the United
States and foreign countries on all inventions, developments and
improvements made by or on behalf of the Company relating to the
MULTIKINE technology. The license was to remain in effect until
the expiration or abandonment of all patent rights or until the
MULTIKINE technology entered into the public domain, whichever
was later.
Prior to October, 1996, Maximilian de Clara, an Officer,
Director and shareholder of the Company, owned 50% and 30%,
respectively, of Hooper and Shanksville. Between 1985 and
October 1996 Mr. de Clara owned all of the issued and outstanding
stock of Sittona. In October 1996, Mr. de Clara disposed of his
interest in Hooper, Shanksville and Sittona.
In January 1997 Hooper and Shanksville sold all of their
rights in the MULTIKINE technology to Sittona. Immediately
following these trans- actions, Sittona sold all of its rights in
the MULTIKINE technology to the Company, including all rights
acquired from Hooper and Shanksville, in consideration for
$500,000 in cash and 751,678 shares of the Company's common
stock. The shares of the Company's Common Stock acquired by
Sittona as a result of this transaction are being offered to the
public by means of Registration Statement which was declared
effective by the Securities and Exchange Commission on March 19,
1997.
Stockholder Return Performance Graph
Set forth below is a line graph comparing the yearly
percentage change in the cumulative total stockholder return on
the Company's Common Stock with the cumulative total return of
the S&P 500 Stock Index and the Biotechnology peer group for the
five fiscal years ending September 30, 1996.
(Graph will appear here.)
PROPOSAL TO APPROVE SALE OF COMMON STOCK AND WARRANTS
In June 1995 the Company, in a private offering, sold
575,000 units at a price of $2.00 per unit. Each unit consisted
of one share of the Com- pany's common stock and one warrant.
Each Warrant entitled the holder to pur- chase one additional
share of the Company's common stock at a price of $3.25 per share
at any time prior to June 30, 1997. In September 1995, the
Company, in a separate private offering, sold another 575,000
units at a price of $2.00 per unit. The units sold in the
September 1995 offering were identical to the units sold in the
June 1995 offering. In addition, the investors in the June and
September 1995 offerings were the same.
Immediately prior to the June l995 offering, the Company had
4,l88,244 shares of common stock issued and outstanding. When
considering the June and September 1995 offerings together, and
giving effect to the shares of common stock which were
subsequently issued upon the exercise of the warrants which
comprised a part of the units, the Company sold 2,300,000 shares
of its common stock in these offerings.
The Company did not solicit stockholder approval for the
June and September 1995 offerings since neither the Colorado
Business Corporation Act nor the Company's Articles of
Incorporation required such approval.
Notwithstanding the above the rules of NASDAQ Stock Market
requires a company whose securities are listed on the NASDAQ
National Market System to obtain shareholder approval if more
than 20% of such a company's securities are to be sold in a
private offering and below the market price of the company's
securities. The NASD determined that (i) the Company's June and
September 1995 offerings were a single private offering, (ii) the
shares of the Company's Common Stock sold in these offerings
exceeded 20% of the then outstanding shares of the Company's
Common Stock and (iii) the shares of the Company's Common Stock
sold in the June and September 1995 offerings were sold at a
price below the then prevailing market price of the Company's
Common Stock. Since the Company did not obtain shareholder
approval for the June and September 1995 offerings the NASD
determined that the Company had violated its rule with respect to
private offerings and transferred the listing of the Company's
securities from the NASDAQ National Market System to the NASDAQ
SmallCap Market.
The Company has had discussions with the American Stock
Exchange con- cerning the listing of the Company's securities.
As part of these discussions, the staff of the American Stock
Exchange has requested that the Company obtain shareholder
approval of the sale of the common stock and warrants in the June
and September l995 offerings.
If the majority of the shareholders present in person or by
proxy at the annual meeting do not approve this proposal, the
Company does not intend to rescind the sale of the common stock
and warrants or to modify the terms pertaining to the sale of
these securities in any way. If the majority of the shareholders
approve the June and September l995 offerings, there can be no
assurance that the Company will be successful in having its
securities approved for listing on the American Stock Exchange.
The Company is requesting stockholder approval of the sale
of the units in the June and September l995 offerings. The
Company's Board of Directors believes that approval of this
Proposal is in the best interests of both the Company and its
stockholders and unanimously recommends that stockholders vote
"FOR" this Proposal.
The following table reflects the high and low bid prices of
the Com- pany's common stock between June and September l995.
High Low
June l995 $5.50 $2.78
July l995 $4.93 $3.87
August l995 $4.l2 $3.56
September l995 $5.47 $3.56
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche,
independent certified public accountants, to audit the books and
records of the Company for the 1997 fiscal year. Deloitte &
Touche served as the the Company's inde- pendent public
accountants for the fiscal year ended September 30, 1996. A
representative of Deloitte & Touche is expected to be present at
the share- holders meeting and will be available to respond to
any appropriate questions raised at the meeting. Such
representative may make a statement if desired.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the year ending
September 30, 1996 will be sent to any shareholder of the Company
upon request. Requests for a copy of this report should be
addressed to the Secretary of the Company at the address provided
on the first page of this proxy statement.
SHAREHOLDER PROPOSALS
Any shareholder proposal which may properly be included in
the proxy solicitation material for the 1997 annual meeting of
shareholders must be received by the Secretary of the Company no
later than , 1998.
GENERAL
The cost of preparing, printing and mailing the enclosed
proxy, accompanying notice and proxy statement, and all other
costs in connection with solicitation of proxies will be paid by
the Company including any additional solicitation made by letter,
telephone or telegraph. Failure of a quorum to be present at the
meeting will necessitate adjournment and will subject the Company
to additional expense. The Company's annual report, including
finan- cial statements for the 1996 fiscal year, is included in
this mailing.
Management of the Company does not intend to present and
does not have reason to believe that others will present any
other items of business at the annual meeting. However, if other
matters are properly presented to the meeting for a vote, the
proxies will be voted upon such matters in accordance with the
judgment of the persons acting under the proxies.
Please complete, sign and return the enclosed proxy promptly. No
postage is required if mailed in the United States.
2628D:3-19
CEL-SCI CORPORATION
This Proxy is Solicited by the Board of Directors
The undersigned stockholder of the Company,
acknowledges receipt of the Notice of the Annual Meeting of
Stockholders, to be held , 1997,
.M. local time, at the Holiday Inn Hotel & Suites, 625 First
Street, Alexandria, Virginia, 22314, and hereby appoints
Maximilian de Clara or Geert R. Kersten with the power of
substitution, as Attorneys and Proxies to vote all the shares of
the undersigned at said annual meeting of stockholders and at all
adjournments thereof, hereby ratifying and confirming all that
said Attorneys and Proxies may do or cause to be done by virtue
hereof. The above- named Attorneys and Proxies are instructed to
vote all of the undersigned's shares as follows:
(1) To elect the directors who shall constitute the Company's
Board of
Directors for the ensuing year.
/ / FOR all nominees listed below (except as marked to the
contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST
BELOW)
/ / WITHHOLD AUTHORITY to vote for all nominees
listed below
Nominees:
Maximilian de Clara Geert R. Kersten Mark V. Soresi F.
Donald Hudson
(2) To ratify the 1995 sale of 1,150,000 shares of common stock
and 1,150,000 common stock purchase warrants.
/ / FOR / / AGAINST / /
ABSTAIN
(3) To ratify the appointment of Deloitte & Touche as the Company's
independent accounts for the fiscal year ending September 30,
1997.
/ / FOR / / AGAINST / /
ABSTAIN
To transact such other business as may properly
come before the meeting.
